Gold price retreats as traders await for US data, heightened US yields

Gold holds just below its opening price, constrained by US 10-year Treasury yield rising to 4.272%.
Traders await US Nonfarm Payrolls, Q3 GDP, and the PCE Price Index, which could influence the Fed's policy outlook.
Political and geopolitical tensions linger as election polls narrow; though Israel’s conflict with Iran woes begin to fade.

Gold traded slightly below its opening price at the beginning of the week and is down by 0.15%, weighed down by rising US Treasury yields. Market players prepare for a busy economic docket in the United States (US), as the data will be crucial with investors looking for cues for the Federal Reserve’s (Fed) monetary policy path.

The XAU/USD trades at $2,742 after hitting a daily high of $2,747. The yield on the US 10-year Treasury note continued to climb, up by three basis points at 4.272%. This has kept Bullion prices from recording a new all-time high above $2,758 as some analysts eye the $2,800 mark toward the end of the year.

Meanwhile, traders are also eyeing the November 5 US election. According to polling site FiveThirtyEight, Trump's chances of winning the US election have increased to 52% compared to 48% for Vice President Kamala Harris. Despite this, the Democratic nominee still holds a slight lead in most national polls.

Traders are also awaiting a busy economic schedule, which will feature a tranche of job data: JOLTS, ADP Employment Change, Initial Jobless Claims, and Nonfarm Payrolls.

Other data will be revealed like the Gross Domestic Product (GDP) for the third quarter of 2024, the ISM Manufacturing PMI, and the Fed’s preferred inflation gauge — the Personal Consumption Expenditures (PCE) Price Index.

Aside from this, geopolitics came back to the fore over the weekend after Israel launched missiles at several military targets in Iran, avoiding energy and nuclear facilities.

It’s worth noting that Fed officials are in blackout mode as they prepare for the November 7-8 meeting. They will break that period once Chair Jerome Powell speaks at his press conference.

Daily digest market movers: Gold price dips ahead of busy US docket

The US Dollar Index (DXY), which tracks the Dollar's value against a basket of six currencies, is flat at 104.27.
On Tuesday, the US schedule will feature the JOLTS Job Openings report for September, which is expected to show a dip from 8.04 million to 7.99 million.
At the same time, the Conference Board (CB) is expected to release October’s Consumer Confidence reading, which is likely to improve from 98.7 to 99.3.
The US Bureau of Economic Analysis will reveal Wednesday's GDP for the third quarter. Estimates suggest the economy grew 3% QoQ, unchanged compared to 2024’s second quarter.
The Atlanta Fed GDP Now model suggests the economy grew by 3.3% in Q3 2024.
Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 49 bps of Fed easing by the end of the year.

XAU/USD technical outlook: Gold price drops below $2,750

Gold price uptrend remains intact with no reversal pattern around record highs, though it has consolidated within the $2,700-$2,750 area. A breach of the top of the range will immediately expose the all-time high at $2,758. Once surpassed, the next stop would be the $2,775 area before challenging $2,800.

On the other hand, if sellers move in and push prices below $2,700, the first support would be the September 26 swing high, which turned support at $2,685, followed by the 50-day Simple Moving Average (SMA), which turned support at $2,603.

Momentum suggests the non-yielding metal could consolidate as the Relative Strength Index (RSI) remains bullish but aims lower. Until the RSI clears the latest peak, Gold could’ve had the chance to print record highs. Otherwise, beware of a pullback.

Gold FAQs

Why do people invest in Gold?

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Who buys the most Gold?

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

How is Gold correlated with other assets?

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

What does the price of Gold depend on?

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.